With offshore drilling contractors raking in the cash, it may feel like splitting hairs to rank one versus another. Noble
ENSCO, along with Noble, boasts the best drilling margins, while its stock price has languished. Before I explain why I think that will change in 2008, let's look at the firm's recently reported fourth-quarter and full-year results.
In the quarter, ENSCO's jackup dayrates lifted to a handsome $141,000 per day, though utilization was a bit soft at 89%. Cash generated in the full year ran far in excess of capital expenditure requirements, and the company spent more than half a billion dollars on share repurchases, which has been giving quite a lift to per-share earnings. ENSCO closed out the year with a beautiful balance sheet, as demonstrated by a roughly 7% debt-to-capitalization ratio.
Now, with results like those, where's the room for improvement? Well, for one, plenty of jackups look to be rolling to higher dayrates in 2008. For example, the ENSCO 74, working for Apache
Just as important is the ENSCO 7500, which just moved to a much higher rate for Chevron